The stablecoin will be issued by a crypto startup connected with Donald Trump and is pegged to the US dollar after raising major funding from the sale of a separate digital token. This marks a significant injection into the market for stablecoins, whose reach has been massively ambitious and represents an ever-growing presence in the crypto industry.
Launch of USD1 Stablecoin
World Liberty Financial is announcing the launch of USD1, a one-dollar stablecoin that is fully backed by a reserve portfolio of US Treasuries, dollars and other cash equivalents. The company’s team plans to accompany it with a stable, reliable, and secure digital asset to be used all through the cryptocurrency ecosystem.
The Role of Stablecoins in the Market
Dollar-denominated stablecoins such as Tether and USDC are vital to the cryptocurrency trading ecosystem. They allow for the transfer of funds from one crypto to another, and offer a means to convert digital assets into fiat. The total market, also known as “market value,” has enabled the valuation of all the stablecoins to exceed $237 billion and has been accelerating for the last few years. Tether, which issues the biggest stablecoin, for instance, fortune last year.
USD1 is “designed to be embedded into the framework of sovereign investors and large institutions” for efficient and secure cross-border transactions, Zach Witkoff, co-founder of World Liberty, told . The company points out that each USD1 backs “fully backed by a reserve portfolio that is regularly audited by a third party accounting firm,” though it did not give details about the accounting firm or the launch date. The collateral backing USD1 will be kept under custody with California-headquartered BitGo. USD1 — BitGo will leverage its prime brokerage service, offering institutional customers liquidity and trading services.
Donald Trump, his sons and the real estate mogul Steve Witkoff, father of Zach Witkoff, founded World Liberty Financial days before Trump became president of the United States. Trump has expressed support for the crypto industry previously, pledging to make changes to how it’s regulated in the US. His links to crypto ventures have come under scrutiny from government ethics watchdogs and political opponents over potential conflicts of interest.World Liberty Financial concluded a coin sale for its new cryptocurrency coin, $WLFI, for the amount of $550 million.
USD1 CHALLENGES STABLECOINS
World Liberty’s introduction of USD1 means this issuer is now in direct competition in the stablecoin dialogue with established players in the market such as Tether or Circle (the issuer of USDC). While issuing a stablecoin is extremely easy, building an ecosystem to spend it in is another story entirely, a payments infrastructure expert behind many stablecoins. In order for USD1 to work, it needs to get users and it needs mass adoption.
Applications of Blockchain Technology and Future Perspectives
The USD1 would be first issued on Ethereum and Binance Smart Chain blockchains. These are digital ledgers that allow for the transfer of cryptocurrencies. World Liberty Financial Plans World Liberty Financial will expand the use of USD1 for other blockchains in the future. Binance Smart Chain, which the cryptocurrency exchange Binance created in 2020, is one of the largest blockchain platforms by total value of assets held.
A Brief History of Regulatory Troubles at Binance
Binance, the largest crypto exchange and the architect of Binance Smart Chain, has experienced regulatory problems in the past. Its founder and former chief executive, Changpeng Zhao, was sentenced to a prison term in the United States for violating anti-money laundering laws. The Questions Raising the Due Diligence, how Reckless Were World Liberty and Binance?
Overall Market Implications
A venture associated with Donald Trump launching USD1 could disrupt the stablecoin market. With any luck, USD1 will go a long way toward competing with the existing players, gaining the ability to persuade users of its legitimacy and navigate a shifting regulatory landscape. How this will impact the cryptocurrency industry’s long-term growth is yet unknown.
